By Mike Colpitts
Driven by bank moratoriums on foreclosures triggered by lenders’ mistakes, foreclosure activity dropped to a three year low in February as mortgage servicing companies slowly resumed their repossession procedures.
In the 26 states that have judicial foreclosure processes, where lenders temporarily called-off foreclosures as a result of faulty legal paperwork, default notices decreased 19% for the month and were down 48% from year ago figures.
Default notices, scheduled auctions of homes and bank repossessions were reported on 225,101 U.S. residential properties during the month, marking a 14% drop from January, and a 27% decline from a year ago. The drop marks the biggest year over year decrease since RealtyTrac has been keeping track of foreclosure activity in 2005.
“While a small part of February’s decrease can be attributed to it being a short month and bad weather, the bottom line is that the industry is in the midst of a major overhaul that has severely restricted its capacity to process foreclosures,” said RealtyTrac CEO James Saccacio. “We expect to see the numbers bounce back, but that will likely take several months. And monthly volume may never return to its peak in March 2010 of more than 367,000 properties receiving foreclosure filings.”
Some 63,165 properties received default notices for the first time in February, a 16% decline from the previous month and a 41% drop from a year ago as default notices hit a four year low.
Foreclosure auctions, the last step in the painful repossession process were scheduled for the first time on 97,293 properties during the month, which was a 21% drop from a year ago. Auctions on properties hit a 27-month low in February and were down 38% from their peak high of 158,105 in March 2010.
However, lenders foreclosed on 64,643 residential properties in February, a drop of 17% from the previous month, and only 18% down from a year ago. But formal bank repossessions in states where moratoriums on foreclosures took place reached a 22-month low for the month down 37% from their peak high.
Nevada posted the nation’s highest state foreclosure rate for the 50 th straight month in February with one in every 119 Nevada housing units receiving a foreclosure filing during the month.
Arizona posted the country’s second highest state foreclosure rate. One in every 178 housing units had a foreclosure filing, and California posted the nation’s third highest rate. Ten states accounted for more than 70% of the national total.